Retailers shouldn’t be threatened by digital downloads just yet

According to a leading market research company, paid digital music downloads don’t pose a threat to retailers as of yet, due to the fact that CDs still hold a vast majority share of all music sold. But this won’t last forever with the gap slowly closing over time.

The latest US statistics from The NPD Group demonstrate that for the first half of 2009, CDs comprised 65 per cent of all music sold compared to 35 per cent for paid digital downloads.

In comparison, paid digital music downloads comprised just 20 per cent of the market in 2007 and 30 per cent in 2008.

“Many people are surprised that the CD is still the dominant music delivery format, given the attention to digital music and the shrinking footprint for physical products,” said Russ Crupnick, vice president of entertainment industry analysis.

“But with digital music sales growing at 15 to 20 per cent, and CDs falling by an equal proportion, digital music sales will nearly equal CD sales by the end of 2010.”

The NPD MusicWatch report also highlights that iTunes is currently the number one in terms of unit sales volume of music sold at retail, with a 25 per cent share of the market. This is a rise from 21 per cent in 2008 and 14 per cent in 2007.

In terms of just digital downloads iTunes has a dominant share of the market with 69 per cent of all music downloads occurring through the service. AmazonMP3 is a distant second with eight per cent.

“The growth of legal digital music downloads, and Apple’s success in holding that market, has increased iTunes overall strength in the retail music category,” Crupnick said.

“But the importance of the big box retailers shouldn’t be dismissed, as long as the majority of music consumers continue to buy CDs.”